If you're on 3.41 get deank's ebootmod tool comes with multiman. Grab the KZ3 eboot and drag and drop it over the ebootmod tool icon, it'll create a MODIFIED_EBOOT.BIN, put that in the KZ3 USRDIR directory erase the original eboot and then rename the MODIFIED_EBOOT.BIN to EBOOT.BIN. With a disc in drive, open multiman and select KZ3, multiman will ask if you want to change the PARAM.SFO from 3.55 to 3.41 say yes. Play the game via disc. (You can update to 1.05 but updating isn't necessary to play the game in it's entirety).
Sidenote: you may not want to erase the original eboot just in case something goes wrong, just rename it something other than EBOOT.BIN
PS3 Slim 4.21.2 Rebug REX 4.31 Spoof (external 1TB/3TB), PS2 Fat w/ Internal HD